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Marketing

What is Consumer Buying Behaviour?

Definition of Buying Behaviour:

Buying Behaviour is the decision processes and acts of people involved in buying and using
products.

Firms need to understand:

• why consumers make the purchases that they make?

• what factors influence consumer purchases?
• the changing factors in our society.

Consumer Buying Behaviour refers to the buying behaviour of the ultimate consumer. A firm
needs to analyze buying behaviour for:

• Buyers reactions to a firms marketing strategy has a great impact on the firm’s success.
• The marketing concept stresses that a firm should create a Marketing Mix (MM) that
satisfies (gives utility to) customers, therefore need to analyze the what, where, when and
how consumers buy.
• Marketers can better predict how consumers will respond to marketing strategies.

Stages of the Consumer Buying Process

Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual
purchasing is only one stage of the process. Not all decision processes lead to a purchase. All
consumer decisions do not always include all 6 stages, determined by the degree of
complexity...discussed next.

The 6 stages are:

1. Problem Recognition(awareness of need)--difference between the desired state and the

actual condition. Deficit in assortment of products. Hunger--Food. Hunger stimulates
your need to eat.
Can be stimulated by the marketer through product information--did not know you were
deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that
you need a new pair of shoes.
2. Information search--
o Internal search, memory.
o External search if you need more information. Friends and relatives (word of
mouth). Marketer dominated sources; comparison shopping; public sources etc.

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A successful information search leaves a buyer with possible alternatives, the evoked set.

Hungry, want to go out and eat, evoked set is

o chinese food
o indian food
o burger king
o klondike kates etc
3. Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer
wants or does not want. Rank/weight alternatives or resume search. May decide that you
want to eat something spicy, indian gets highest rank etc.
If not satisfied with your choice, then return to the search phase. Can you think of another
restaurant? Look in the yellow pages etc. Information from different sources may be
treated differently. Marketers try to influence by "framing" alternatives.
4. Purchase decision--Choose buying alternative, includes product, package, store, method
of purchase etc.
5. Purchase--May differ from decision, time lapse between 4 & 5, product availability.
6. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive
Dissonance, have you made the right decision. This can be reduced by warranties, after
sales communication etc.
After eating an indian meal, may think that really you wanted a chinese meal instead.

Types of Consumer Buying Behavior

Types of consumer buying behavior are determined by:

• Level of Involvement in purchase decision. Importance and intensity of interest in a

product in a particular situation.
• Buyers, level of involvement determines why he/she is motivated to seek information
about a certain products and brands but virtually ignores others.

High involvement purchases--Honda Motorbike, high priced goods, products visible to others,
and the higher the risk the higher the involvement. Types of risk:

• Personal risk
• Social risk
• Economic risk

The four type of consumer buying behaviour are:

• Routine Response/Programmed Behaviour--buying low involvement frequently

purchased low cost items; need very little search and decision effort; purchased almost
automatically. Examples include soft drinks, snack foods, milk etc.

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• Limited Decision Making--buying product occasionally. When you need to obtain

information about unfamiliar brand in a familiar product category, perhaps. Requires a
moderate amount of time for information gathering. Examples include Clothes--know
product class but not the brand.
• Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or
infrequently bought products. High degree of economic/performance/psychological risk.
Examples include cars, homes, computers, education. Spend a lot of time seeking
information and deciding.
Information from the companies MM; friends and relatives, store personnel etc. Go
through all six stages of the buying process.
• Impulse buying, no conscious planning.

The purchase of the same product does not always elicit the same Buying Behaviour. Product
can shift from one category to the next.
For example:
Going out for dinner for one person may be extensive decision making (for someone that does
not go out often at all), but limited decision making for someone else. The reason for the dinner,
whether it is an anniversary celebration, Valentine’s Day dinner, or a meal with a couple of
friends will also determine the extent of the decision making.

Categories that Effect the Consumer Buying Decision Process

A consumer, making a purchase decision will be affected by the following three factors:

1. Personal
2. Psychological
3. Social

The marketer must be aware of these factors in order to develop an appropriate MM for its target
market.

Personal

...unique to a particular person. Demographic Factors such as Sex, Race, Age etc.
Who in the family is responsible for the decision making?
Young people purchase things for different reasons than older people.

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Psychological factors

Psychological factors include:

• Motives--

A motive is an internal energizing force that orients a person's activities toward satisfying
a need or achieving a goal.
Actions are effected by a set of motives, not just one. If marketers can identify motives
then they can better develop a marketing mix.
MASLOW hierarchy of needs!!

o Physiological
o Safety
o Love and Belonging
o Esteem
o Self Actualization

Need to determine what level of the hierarchy the consumers are at to determine what
motivates their purchases.

Nutrament Debunked...

Nutrament, a product marketed by Bristol-Myers Squibb originally was targeted at

consumers that needed to receive additional energy from their drinks after exercise etc., a
fitness drink. It was therefore targeted at consumers whose needs were for either love and
Belonging or esteem. The product was not selling well, and was almost terminated. Upon
extensive research it was determined that the product did sell well in inner-city
convenience stores. It was determined that the consumers for the product were actually
drug addicts who couldn't digest a regular meal. They would purchase Nutrament as a
substitute for a meal. Their motivation to purchase was completely different to the
motivation that B-MS had originally thought. These consumers were at the Physiological
level of the hierarchy. BM-S therefore had to redesign its MM to better meet the needs of
this target market.
Motives often operate at a subconscious level therefore are difficult to measure.

• Perception--

What do you see?? Perception is the process of selecting, organizing and interpreting
information inputs to produce meaning. IE we chose what info we pay attention to,
organize it and interpret it.
Information inputs are the sensations received through sight, taste, hearing, smell and
touch.

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Selective Exposure-select inputs to be exposed to our awareness. More likely if it is

linked to an event, satisfies current needs, intensity of input changes (sharp price drop).

Selective Distortion-Changing/twisting current received information, inconsistent with

beliefs.

Advertisers that use comparative advertisements (pitching one product against another),
have to be very careful that consumers do not distort the facts and perceive that the
advertisement was for the competitor. A current example...MCI and AT&T...do you ever
get confused?

Selective Retention-Remember inputs that support beliefs, forgets those that don't.
Average supermarket shopper is exposed to 17,000 products in a shopping visit lasting 30
minutes-60% of purchases are unplanned. Exposed to 1,500 advertisement per day. Can't
be expected to be aware of all these inputs, and certainly will not retain many.

Interpreting information is based on what is already familiar, on knowledge that is stored

in the memory.

• Ability and Knowledge--

Need to understand individual’s capacity to learn. Learning, changes in a person's

behaviour caused by information and experience. Therefore to change consumers'
behaviour about your product, need to give them new information re: product...free
sample etc.

When making buying decisions, buyers must process information.

Knowledge is the familiarity with the product and expertise.

Inexperience buyers often use prices as an indicator of quality more than those who have
knowledge of a product.
Non-alcoholic Beer example: consumers chose the most expensive six-pack, because
they assume that the greater price indicates greater quality.

Learning is the process through which a relatively permanent change in behaviour results
from the consequences of past behaviour.

• Attitudes--

Knowledge and positive and negative feelings about an object or activity-maybe tangible
or intangible, living or non- living.....Drive perceptions

Individual learns attitudes through experience and interaction with other people.
Consumer attitudes toward a firm and its products greatly influence the success or failure
of the firm's marketing strategy.

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Oldsmobile vs. Lexus, due to consumers attitudes toward Oldsmobile (as discovered by
class exercise) need to disassociate Aurora from the Oldsmobile name.

Exxon Valdez-nearly 20,000 credit cards were returned or cut-up after the tragic oil spill.

Honda "You meet the nicest people on a Honda", dispel the unsavory image of a
motorbike rider, late 1950s. Changing market of the 1990s, baby boomers aging, Hondas
market returning to hard core. To change this they have a new slogan "Come ride with
us".

Attitudes and attitude change are influenced by consumers, personality and lifestyle.

Consumers screen information that conflicts with their attitudes. Distort information to
make it consistent and selectively retain information that reinforces our attitudes. IE
brand loyalty.

There is a difference between attitude and intention to buy (ability to buy).

• Personality--

all the internal traits and behaviours that make a person unique, uniqueness arrives from a
person's heredity and personal experience. Examples include:

o Workaholism
o Compulsiveness
o Self confidence
o Friendliness
o Adaptability
o Ambitiousness
o Dogmatism
o Authoritarianism
o Introversion
o Extroversion
o Aggressiveness
o Competitiveness.

Traits affect the way people behave. Marketers try to match the store image to the
perceived image of their customers.

There is a weak association between personality and Buying Behaviour, this may be due
to unreliable measures. In Nike ads for example, Consumers buy products that are
consistent with their self concept.

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• Lifestyles--

Recent US trends in lifestyles are a shift towards personal independence and

individualism and a preference for a healthy, natural lifestyle.

Lifestyles are the consistent patterns people follow in their lives.

EXAMPLE: healthy foods for a healthy lifestyle. Sun tan not considered fashionable in
US until 1920's. Now an assault by the American Academy of Dermatology.

Social Factors

Consumer wants, learning, motives etc. are influenced by opinion leaders, person's family,
reference groups, social class and culture.

• Opinion leaders--

Spokes-people etc. Marketers try to attract opinion leaders...they actually use (pay)
spokespeople to market their products. Michael Jordon (Nike, McDonalds, Gatorade etc.)

Can be risky...Michael Jackson...OJ Simpson...Chevy Chase

• Roles and Family Influences--

Role...things you should do based on the expectations of you from your position within a
group.
People have many roles.
Husband, father, employer/ee. Individuals role are continuing to change therefore
marketers must continue to update information.

Family is the most basic group a person belongs to. Marketers must understand:

o that many family decisions are made by the family unit

o consumer behaviour starts in the family unit
o family roles and preferences are the model for children's future family (can
reject/alter/etc)
o family buying decisions are a mixture of family interactions and individual
decision making
o family acts an interpreter of social and cultural values for the individual.

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The Family life cycle: families go through stages. Each stage creates different consumer
demands:

o bachelor stage...
o newly married, young, no children...me
o full nest I, youngest child under 6
o full nest II, youngest child 6 or over
o full nest III, older married couples with dependent children
o empty nest I, older married couples with no children living with them, head in
labour force
o empty nest II, older married couples, no children living at home, head retired
o solitary survivor, in labour force
o solitary survivor, retired
o Modernized life cycle includes divorced and no children.

Because 2 income families are becoming more common, the decision maker within the
family unit is changing...also, family has less time for children, and therefore tends to let
them influence purchase decisions in order to alleviate some of the guilt. (Children
influence about $130 billion of goods in a year) Children also have more money to spend
themselves.

• Reference Groups--

Individual identifies with the group to the extent that he takes on many of the values,
attitudes or behaviours of the group members.

Families, friends, sororities, civic and professional organizations.

Any group that has a positive or negative influence on a person’s attitude and behaviour.
Membership groups (belong to)
Affinity marketing is focused on the desires of consumers that belong to reference
groups. Marketers get the groups to approve the product and communicate that approval
to its members. Credit Cards etc.!!

Aspiration groups (want to belong to)

Disassociate groups (do not want to belong to)
Honda, tries to disassociate from the "biker" group.

The degree to which a reference group will affect a purchase decision depends on an
individual’s susceptibility to reference group influence and the strength of his/her
involvement with the group.

• Social Class--

an open group of individuals who have similar social rank. Jamaica is not a classless
society. Class criteria: occupation, education, income, wealth, race, ethnic groups and
possessions.

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Social class influences many aspects of our lives. IE upper middle class prefer luxury
cars Mercedes.

o Upper -upper-upper class, .3%, inherited wealth, aristocratic names.

o Lower-upper class, 1.2%, newer social elite, from current professionals and
corporate elite
o Upper-middle class, 12.5%, college graduates, managers and professionals
o Lower middle class, 32%, average pay white collar workers and blue collar
friends
o Working class, 38%, average pay blue collar workers
o Upper-lower class, 9%, working
o Lower-lower class, 7%,

Social class determines to some extent, the types, quality, quantity of products that a
person buys or uses.

Lower class people tend to stay close to home when shopping, do not engage in much
pre-purchase information gathering.
Stores project definite class images.

Family, reference groups and social classes are all social influences on consumer
behaviour. All operate within a larger culture.

• Culture and Sub-culture--

Culture refers to the set of values, ideas, and attitudes that are accepted by a homogenous
group of people and transmitted to the next generation.

Culture also determines what is acceptable with product advertising. Culture determines
what people wear, eat, reside and travel. Cultural values in the US are good health,
education, individualism and freedom.

Different society, different levels of needs, different cultural values.

Culture can be divided into subcultures:

o geographic regions
o human characteristics such as age and ethnic background.

Culture affects what people buy, how they buy and when they buy.

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Understanding Consumer Buying Behaviour offers consumers greater satisfaction (Utility). We

must assume that the company has adopted the Marketing Concept and are consumer oriented.

• The study of how and why people purchase goods and services is termed consumer
buying behaviour . The term covers the decision-making processes from those that
precede the purchase of goods or services to the final experience of using the product or
service. Models of consumer buying behaviour draw together the various influences on,
and the process of, the buying decision. They attempt to understand the proverbial
'blackbox' of what happens within the consumer between his or her exposure to
marketing stimuli and the actual decision to purchase.

Figure Black box model of consumer buying behaviour

Source: Keegan et al. (1992, p. 193)

The essence of the model is that it suggests consumers will respond in particular ways to
different stimuli after they have 'processed' those stimuli in their minds. In more detail, the model
suggests that factors external to the consumer will act as a stimulus for behaviour, but that the
consumer's personal characteristics and decision-making process will interact with the stimulus
before a particular behavioural response is generated.

It is called the 'black box' model because we still know so little about how the human mind
works. We cannot see what goes on in the mind and we don't really know much about what goes
on in there, so it's like a black box. As far as consumer behaviour goes, we know enough to be
able to identify major internal influences and the major steps in the decision-making process
which consumers use, but we don't really know how consumers transform all these data, together
with the stimuli, to generate particular responses.

Turn now to the following reading to begin looking at your text's introduction to buyer
behaviour.

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Psychological influences

• Kotler et al. (2004) elaborate on several psychological variables influencing consumer

buying behaviour:
• perception
• motivation
• learning
• beliefs and attitudes
• personality and self concept.
• If you look back to Figure 4.1 you will note that Keegan et al. (1992) refer to these as
being included in the buyer's mind or internal factors.

Although your text covers the remaining psychological variables well, it is worth mentioning the
importance of attitudes. An attitude is a learned, relatively enduring feeling of being favourable
or unfavourable towards something, whether that might be, say a particular outlet, product or
brand. As attitudes are learned, they are difficult to change and they lead people to act fairly
consistently towards similar objects. As marketers, therefore, it is much more appropriate that we
should try to match our products to people's attitudes rather than try to change those attitudes.
This is particularly relevant for international marketing, so please keep it in mind when you
study the following reading on an international aspect of consumer behaviour.

Activity

The three selective processes are very relevant to your study habits as a student (a consumer of
this course). So:

1. Think of, and write down, an example of selective exposure which relates to your study
activities.
2. Do the same for selective distortion (also known as selective perception) and selective
retention.
3. Then answer the following question: how can I apply this information to improve my
study habits?

Cultural and social influences

• Your text suggest that there are a number of social and cultural influences:
• culture and sub-culture
• social class
• household types
• reference groups
• roles and status.

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Marketers understand family purchasing behaviour in terms of the family life-cycle as well as the
role of individual family members. Table 4.1 presents the traditional family life-cycle in terms of
the opportunities each stage provides for marketing. However, demographic changes are altering
the traditional family life-cycle.

Table The traditional family life-cycle

Stage in cycle Characteristics Opportunities for marketing

Bachelor, male Independent; young; early Clothing; automobile; stereo;
or female stage of career; low travel; restaurants; entertainment;
earnings, low appeal to status
discretionary income
Newly married Two incomes; relative Apartment furnishings; travel;
independence; present- clothing; durables; appeal to
and future-oriented enjoyment and togetherness
Full nest I Youngest child under 6; Goods and services geared to
one to one-and-a-half child; home; family-use items;
incomes; limited practicality of items; durability;
independence; future- safety; pharmaceuticals; appeal
oriented to economy; child care
Full nest II Youngest child over 6, Savings; home; education; family
but dependent; one-and-a- vacations; child-oriented
half to two incomes; at products; some interest in
least one spouse luxuries; appeal to comfort and
established in career; long-range enjoyment
future-oriented
Full nest III Youngest child living at Education; expensive durables
home, but independent; for children; replacement and
highest income level; improvement of parents'
thoughts of future durables; appeal to comfort and
retirement luxury
Empty nest I No children at home; Vacation home; travel; clothing;
independent; good entertainment; luxuries; appeal to
income; thoughts of self self-gratification
and retirement
Empty nest II Retirement; less income Travel; recreation; living in new
and expenses; present- home; pharmaceuticals and
oriented health items; little interest in
luxuries; appeal to comfort at a
low price
Sole survivor I Only one spouse alive; Immersion in job and friends
actively employed; leading to interest in travel,
present -oriented; good clothing, health and recreation
income areas; appeal to productive

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citizen
Sole survivor II Only one spouse alive; Travel; recreation;
retired; some feeling of pharmaceuticals; security; appeal
futility; less income to economy and social activity

Source: Evans and Berman (1992, p. 146)

• Now it is time to review what your text has to say about the social and personal
influences which act as stimuli in consumer behaviour whilst the reading illustrates how
advertisers are using their knowledge of women and the family to promote products. It is
also a good opportunity to read through an article by Dessler (1990), which although
written over a decade ago, provides some excellent examples of what we have been
discussing in a maritime context.

The decision-making process

Thus far we have discussed the influences that affect what products a consumer decides to
purchase. However, the consumer is yet to make an actual decision! Let us look now at what is
involved in actually making those decisions. Kotler et al. (2004) outline four major types of
decision-making behaviour that a consumer uses. They are:

• complex buying behaviour

• dissonance-reducing buying behaviour
• habitual buying behaviour
• variety seeking buying behaviour.
• Your next reading defines the above decision-making behaviours and introduces you to
the five-step decision-making process consumers go through when accepting or rejecting
a new product. The reading is also useful because it discusses the decision process for
purchasing new products.

• Even though in your role you may be dealing largely with organisations, you will still
need to be familiar with consumer buying behaviour. For example, the demand for
consumer goods that pass through ports is driven by the social and psychological factors
we discussed earlier.

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Business to Business (B2B) buying behaviour

B2B buying is more complex than, yet in some ways similar to, the consumer buying process.
Manufacturers, wholesalers, retailers, governments, non-profit organisations, farms and hospitals
are among the many business buyers. They buy industrial goods and services in order to produce
consumer or other industrial goods and services.

Business buyers tend to be concentrated geographically in the major urban/industrial areas of

countries. In the case of port and shipping services in Australia , they would be largely in the
greater Melbourne and Sydney areas and other capital cities. Business buyers are much smaller
in number than consumer buyers, but they have significantly greater buying power. Compare, for
instance, the contrasts in business needs of furniture retailers for transportation and warehousing
with their consumer needs for transporting/warehousing their personal effects whenever they
move residence.

Reading 4.3

Peppers, D. and Rogers, M. 2001, One to One B2B: Customer Development Strategies for the
Business-to-Business World
(Executive Summary), Peppers + Rogers Group, no other
details available.

Activity

You can appreciate the size of the business market more fully via the following exercise.

Grab the closest pair of shoes you can find and inspect them. Then:

1. Write down each of the component parts of the shoes that you can see (for example, the
eyelets for the laces).
2. Write down all the component parts that you think are probably there but you cannot see
(for example, the leather/filling/synthetic filling inside the heel).
3. Write down all the raw materials that you think have gone into making the component
parts you have just listed (for example, the dye that gives the shoe its colour).
4. Write down some of the machinery that you think might have been involved in the
manufacture of the shoes.

As you will have worked out, each part which goes into the shoes, each item of raw material, and
each piece of machinery, represents multiple transactions at different levels of the industry
hierarchy-the raw material and machinery suppliers, the manufacturers of the shoes, the
wholesalers and the retailers who distribute the shoes to you, the final consumer. In short, the
business market is LARGE and warrants the attention of marketers.

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Business buying processes

This figure provides a useful model of business buyer behaviour that we can contrast with our
consumer black box model

Figure 4.2 A model of business buyer behaviour

Source: Kotler et al. (2004, p. 288)

Consider this

Compare the above model with the black box model of consumer behaviour. What do you think
are the main similarities? What do you think are the main differences?

The basic difference between the two models is in the middle segment: a black box in the case of
consumers, an organisation in the case of business markets. We will be giving our attention to
the two main components of the middle segment: the buying centre and the buying decision
process.

Table: Major differences between business and consumer markets

Characteristic Business market Consumer market

Demand Organisational Individual
Purchase volume Larger Smaller
Number of customers Fewer Many
Location of buyers Geographically Dispersed
concentrated
Distribution structure More direct More indirect
Nature of buying More professional More personal
Nature of buying Multiple Single
influence
Type of negotiations More complex Simpler
Use of reciprocity Yes No
Use of leasing Greater Lesser
Primary promotional Personal selling Advertising

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method

Source: Summers et al. (2003, p. 75)

The buying centre concept is useful in understanding the various influences on the business
buying process. The business marketer, such as a port, terminal or shipping service, needs to be
aware that in any purchasing situation there is not only the buyer, but users, influencers, deciders
and information gatekeepers as well. All these roles comprise the buying centre, and its size and
composition vary depending on the nature of the purchase as well as the type of business.

The buying decision process has a number of major steps that vary from text to text. The
following table, as you will observe, has close counterparts to consumer buying.

Table: Steps in a business buying decision

1. Anticipate or recognize a problem/need/opportunity and a general solution

2. Determine the characteristics and quantity of a needed good or service
3. Describe precise product specifications and critical needs
4. Search for and qualification of potential sources
5. Acquisition and analysis of proposals
6. Evaluation of proposals and selection of suppliers
7. Selection of an order routine

8. Performance feedback and evaluation

Source: Based on Boone and Kurtz (2005, pp. 299-301)

Now that you have thought about the steps in the business decision-making process, and given
that they are reasonably self-explanatory, we will not address them further. Instead turn to the
following reading which will also describe the three main types of decisions which business
buyers make, namely:

• new task (or new buying)

• modified rebuy
• straight rebuy.

The reading will also elaborate on what we have discussed above and includes detail on four
approaches for evaluating and buying products.

Do not forget that business buying is done by individuals or groups of individuals. Thus, social
and psychological factors such as culture and personality do play a part. An astute marketer must
endeavour to understand the interpersonal dynamics within the buying organisation and between
it and his/her own organisation.

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Main types of business markets

There are two main types of business markets:

• institutional markets
• government markets.

The buying of services

Although there have been arguments that models of buying behaviour for goods do not apply
adequately to the buying of services, no definitive models for the latter have arisen. Until they
do, we need to adapt the existing goods-based models, bearing in mind the differences between
goods and services. Remember that services sometimes compete with products in meeting the
buyer's needs, for example, using a trucking firm as opposed to buying one's own truck.

Buyers of services tend to enter into long-term relationships, formal or informal, rather than
make one-off or periodic purchases as they do with physical products. The advantage of this is
that the marketer can develop a valuable database on the client's usage of the service. We will
come back to this issue later in the unit.

It is quite apparent that services are more easily customised to the buyer's needs than goods are.
Attractive though it may seem, customisation is also expensive. Standardisation is cheaper
through economies of scale. Furthermore, buyers do value the consistency and speed that
standardisation makes possible. The ideal is, of course, to have all the benefits of standardisation
with the attractiveness of having some customisation.

We have learnt some of the characteristics of both consumer and business buying behaviour that
are fundamental to all marketing efforts. The study of how people choose, purchase and use
goods and services is neither an esoteric area of research for academics nor an optional concern
of managers. It is no longer appropriate for managers to rely on gut feeling or to extrapolate from
personal buying experience. Anticipating buyer behaviour in response to product, price,
distribution and promotion strategies is indispensable to business success.

Since we now understand the importance of marketing information and the place of market
research in contributing to that information, we can now combine them with what we have
learned in this chapter about buying behaviour. However, there is one aspect to understanding
the marketplace that will help us put all this information into a more useful order; namely, the
segmentation of markets. This allows us to target particular consumers, and to offer our products
in a way that more precisely meets their needs.

Dr. B. Reid 2010